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Urban renewal, or economic imperialism? In Corsica, some residents resorted to dynamiting empty mansions to intimidate the wealthy from taking over their neighborhoods and homes. In San Francisco, we see increasing unrest among the poor and middle classes, for it is no longer a city where the poor and middle classes are permitted to live, let alone welcome…

FRANCE: STRIFE WITH SPECULATORS – Real estate prices on the Mediterranean island of Corsica are extortionate. A little cottage can set you back 400,000 euros. The Corsican authorities have passed a law requiring anyone who wants to buy a house there to have lived on the island for at least 5 years. The move is a response to people from mainland France and abroad buying up properties as holiday homes, causing prices to spiral. As a result, many Corsicans can no longer afford to buy property there. But now a few communities are fighting back, and threatening to enforce pre-emption rights – including the village of Cuttoli near Ajaccio, the birthplace of Napoleon.

SAN FRANCISCO TENDERLOIN PROTESTERS RALLY AGAINST TENANT EVICTIONS: The Tenderloin is the seediest, highest-crime district in The City. Arrests do little to curb assaults, robbery and drug trafficking. Yet a 1 bedroom studio, a 475 square feet apartment, lists for $2295 monthly. Residents protest being evicted and displaced as wealthy yuppies renovate whole districts at bargain prices.

In the Middle Ages, when wealthy power elite wanted a piece of property, they simply used armies to take it.

Today, they use “perfectly legal” economic strong-arm tactics to force existing residents out. Landlords, police and sheriffs handle all that messy, unseemly business of serving eviction notices, warrants and arrests. In the end, the wealthy get what they want, and displaced residents are forced to try to find someplace else to live, else join the growing ranks of homeless.

I don’t have the answers. But we are going to have to find them. It seems obvious that improving a neighborhood and simply taking it over are two different things. Increasingly, this problem is going to become a problem of good government – and governance. We’re being pushed back closer and closer to the feudal economy.

“There is a legitimate concern about large institutions, be they government or others, who haven’t really delivered the America everybody thought we were on our way to,” acknowledged John R. McKernan Jr., a former Maine governor who leads the U.S. Chamber of Commerce Foundation. But, he said, that fear is “totally misplaced” when it comes to the Common Core.

This interesting article mainly focuses on the opposition to the Common Core educational approach, which is opposed by Tea Party conservatives who want to replace public schools wholesale with privately funded schools whose curricula they can control, and by some liberal groups, such as teachers, who want to see a divorce between educational testing and onerous teacher performance evaluations.

The opposition to the Common Core also captures another shift since the Bush administration: While long contemptuous of an expanding federal government, some Republican activists are growing wary of big business, too, including figures like Bill Gates, the billionaire Microsoft founder whose foundation supported the development of the standards.

The facts of the matter are clear. Government hasn’t adequately delivered on its promises of equality, fairness, equal access, and equal opportunity for all to achieve the American Dream.

The elephant in the room here is Big Business. Somewhat arbitrarily, we can map the start of The Big Rip with the dismantling of the old Anti-trust laws, which happened, counterintuitively, in the Democratic Clinton Administration. This breached the geologist’s “angle of repose,” that steepest angle of a debris slope at which a boulder, or a massive pileup, will not slide downhill.

We’ve watched the buildup of a new breed of corporate and financial giants who dwarfed the old “military-industrial complex,” about which Eisenhower warned our nation. We saw monster rogue corporations like Enron. In 2008 we saw the established premier banking cartels of the country almost bring the country and economy to its knees, and the world with it: Chase-JP Morgan, Bank of America, Citibank, Lehman Brothers, AIG, Countrywide, almost every big name financial institution you can think of, and more that you can’t.

Recently, the right-biased Supreme Court handed down its infamous Citizens United and McCutcheon decisions. The decision was manna from heaven for the Charles G. Koch and David H. Koch (“Mr. Coal Is Your Friend”) billionaires and their corporate empires. The Kochs can contribute half a trillion dollars to state and federal election campaigns, and I can contribute $25 annually.

The law, in its majesty, has decreed that corporations, being people, are finally able to participate equally with me and you.

Big Government has not delivered on all its promises; NO. But Big Business has delivered on its promise to dismantle democracy, freedom of speech, and the American Dream. If anybody had been listening, they’ve been warning us all along.

I picked up a free San Mateo Daily Journal yesterday when I joined a friend for lunch. There was a nice story on page 1 about some civic-minded Redwood City high school girls who decided to join a regional Occupy demonstration. They thought, by participating, they could make a difference.

“Students deserve the opportunity to discuss what they care about,” an organizer said. “Once you leave high school, life hits you like a ton of bricks and these students need to know about the troubles with the banking system and why cuts are made to education.”

There was some isolated violence. The real violence was in Oakland, Seattle and elsewhere in the nation. Banks were vandalized, windows were smashed, police cars were burned, police were assaulted, and police and the crowd were at one point bombarded by a roof-top crazy hurling down long sections of heavy steel piping. There was no follow-up story on the high school girls, but I bet most were disappointed.

We all dimly remember when some targets of the Occupy movement’s scorn struck some resonant chord with most of us. The popular spotlight on the vast 99%-1% gap was launched by Occupy. Public resentment against the unholy bank/investment bank consortiums who brought the economy to its knees in 2008 was brought into sharp focus by Occupy.

The cities of Oakland and Washington, D.C. are current newsworthy Occupy targets (among many others), further straining the resources of already financially beleaguered cities and their residents. And why Oakland, indeed? We don’t just have cities to house large law enforcement repositories. Believe it or not, ordinary citizens also try to live in cities, raise kids, and, if possible, earn a living.

Besides discovering that some police departments have learned nothing at all about police brutality vs. effective and humane crowd control in half a century, we don’t hear as much about Occupy these days because the question “how’s your poison oak” is only interesting to most of us for about the first week of the infection.

But they’re still here. What the hell do they really want?

To inspect the horse’s mouth – that part of the equine anatomy presented to those inspecting its teeth – I checked out an actual Occupy web site, OccupyWallStreet.

That site issues a disclaimer on the posted list of demands, “This content is user submitted and not an official statement,” but alas, I could not locate an “official” list. Here’s a smattering of the wackier zany demands I did find:

Repeal the Taft-Hartley Act. Unionize ALL workers immediately. [Return of the 1923 “Wobblies?”]

Open the borders to all immigrants, legal or illegal. Offer immediate, unconditional amnesty, to all undocumented residents of the US. [Oh, sure]

Lower the retirement age to 55. Increase Social Security benefits. [Pie in the sky, a chicken in every pot]

Ban the private ownership of land [Nyet, komrade]

Make homeschooling illegal. Religious fanatics use it to feed their children propaganda. [Regular parents use it to give their kids real educations, too. Even Hippie parents couldn’t have sanctioned this proposal.]

So much for the notion “Occupy” is for increased freedom.

Looking up “Wobblie” in Wikipedia, I find the following wording in their preamble to the “current IWW Constitution:”

The working class and the employing class have nothing in common. There can be no peace so long as hunger and want are found among millions of the working people and the few, who make up the employing class, have all the good things of life. Between these two classes a struggle must go on until the workers of the world organize as a class, take possession of the means of production, abolish the wage system, and live in harmony with the Earth.

Sound familiar? Occupy needs to re-focus or disband. I believe union and popular social movements that address social problems by hurling walls of human bodies into the maw are short-selling the potential of the 99% to conceptualize and debate real issues. “Let’s protest police brutality by seeing if we can provoke it” is not a solution. It’s a shopworn, coldly calculated gambit to manufacture martyrs for a cause that often doesn’t bear up well under closer scrutiny. Rather than performing public-service educational functions, why do these movements invariably send their supporters into the failed strategic equivalent of World War I trench warfare?

Occupy can jolly well get out of the cities and try a 21st-century communications solution, like the Internet.

Occupying Oakland makes about as much sense as picketing “Elmo & Oscar’s Kiddie Daycare Center” to force Assad to democratize Syria, or to induce North Korea to enthusiastically embrace free speech and elected government.

The joke below has lain dormant on my Humor page for well over a decade now. No one knows who wrote it. No one remembers who sent it. There’ve always been several things wrong with it.

1) It’s too close to the truth.
2) There are too many variants of the joke, all kludged together by others trying to get more mileage out of a self-evident fact.
3) These days it seems more appropriate than ever.

Boat Race

The Americans and the Japanese decided to engage in a boat race. Both Teams
practiced hard and long to reach their peak performance levels. On the big
day they felt ready. The Japanese won by a mile.

The American team was discouraged by the loss. Morale sagged. Corporate
management decided that the reason for the crushing defeat had to be found,
so a consulting firm was hired to investigate the problem and recommend
corrective action.

The consultant’s finding: The Japanese team had eight people rowing and one
person steering; the American team had one person rowing and eight people
steering.

After a year of study and millions spent analyzing the problem, the
consultant firm concluded that too many people were steering and not enough
were rowing on the American team.

So as race day neared again the following year, the American team’s
Management structure was completely reorganized. The new structure: four
steering managers, three area steering managers, and a new performance
review system for the person rowing the boat to provide work incentive.

The next year, the Japanese won by TWO miles!!!

Humiliated, the American corporation laid off the rower for poor performance
and gave the managers a bonus for discovering the problem.

Looking at the mock US flag displayed by protesters on Wall Street (click thumbnail for BBC graphic), we can see a field of thirty corporate logos in place of the familiar fifty stars. Most of us could come up with a list of fifty “bad” companies, couldn’t we? I can identify most of the thirty: Nike, Coca Cola, AT&T, Wal-Mart, Lilly, GM, Citi, Apple, Google, Fox, Verizon, Warner Brothers, Exxon, Visa, McDonalds, Disney, Pepsi, Ford, NBC, Intel, Master Card, GE, and Microsoft.

In my own humble microcosm of Americana, I don’t find many of the companies I’d personally fancy seeing there. We can all recall consumer protests against Nike, Wal-Mart, Exxon, and McDonalds. But, “do no evil” Google? Apple? These choices leave me baffled. In some political circles there must still be plenty of antipathy for any large US corporation: sized-based discrimination is sometimes still politically correct.

On one score I do sympathize with these protestors’ frustrations. Wall Street screwed the entire country in the events leading up to the global crash of 2008. But it’s never as simple as that, is it? The collapse having been orchestrated with the full oversight and blessing of the SEC, Fed, Moody’s, S&P and most of the Bush Administration, targeting “Wall Street” isn’t precisely accurate. It was the “too big to fail” bankers themselves that provided the mighty engine for a catastrophic recession that went viral across the globe. What the hell were they thinking? Citi certainly deserves its place on the infamy list, but I feel the sterling reputations of Bank of America, Wells Fargo and many others were tarnished by omission.

As I wrote a friend the other day,

In Europe, countries like Greece ruined the banks, but in the US, the banks ruined the country!

In a somewhat personal aside, my best buddy’s dad was a VP in the “old” BofA (think green visor accountant types), and he is probably rolling over in his grave. None of us should be too surprised at the irresponsible greed of the usual Wall Street perps, but what the banks did was criminally insane.

Recently Cousin Ron Lamont re-posted a Facebook “Like” quote by someone alleging that as early as 1967, liberal economists were calling Social Security a “Ponzi scheme.” This irritated me enough that I removed it with the “hide this post” tool. I’m still considering whether Facebook, a family-friendly safe space, is even the proper forum for hard-core political commentary and opinion.

So to be honest, It’s fair to say I started it all when I re-posted my personal website article “Social Security Not a Ponzi Scheme” on Facebook. Even though PolitiFact [1] rates Perry’s 2011 “Ponzi” statement as “False,” I’d have to rate the 1967 “Ponzi” allegation, far from being a “Pants On Fire” item, as “Half True.”

My cousin’s post was a fair turnaround. Now then, what’s the story about Social Security?

In 1967 Newsweek reportedly ran a column by noted liberal economist Paul Samuelson (of college Economics textbook fame). Samuelson in fact did compare Social Security to a Ponzi scheme [2]. This source cites numerous other early references to the same opinion, including the Wall Street Journal. The source notes that Samuelson was “actually drawing on the Ponzi analogy to defend Social Security”, a back-handed way for an academic to illustrate a point if ever I heard one. There’s a long history of groups that tried to pin Social Security to the mat before. You should read the PolitiFact assessment [1] of the whole issue.

In my first article I showed that Social Security is NOT a Ponzi scheme by definition, but an account that is actually but not physically held in each contributor’s name. Despite all the rhetoric about what Congress is doing or has done with those funds, the account is still due and payable according to the terms of the social contract. The obvious cause for concern is: how long will the Social Security trust fund remain solvent and be able to pay out on its obligations?

Over the years a major defense of Social Security has been that it is deemed “actuarially sound,” meaning that a statistical analysis of FICA and Employer Contributions, charting pay-in and pay-out amounts against actuarial table life expectancies shows that Social Security is paying its own way, or is at least solvent. Well, it probably would be solvent if its funds were securely invested at going interest rates like any other form of pension fund.

I recently read a cynical charge somewhere that when FDR and the New Deal Congress inaugurated Social Security in 1935, the actuarial life expectancy of the current generation of retirees was about three years. I couldn’t verify that. Social Security Online [3] presents a quite different accounting: “men attaining 65 in 1990 can expect to live for 15.3 years compared to 12.7 years for men attaining 65 back in 1940.” 1940 was the first year Americans could collect Social Security.

One study I can and did do is an analysis of my own SSI account. I started drawing on it at age 65 in 2009. Raw data includes all of my contributions from 1960 to 2009 (49 years), matching Employer contributions in like amounts, and even a withholding rate adjustment recalculation for a five-year period where I was mostly self-employed. Given the taxable income data posted to everyone’s annual SSA statements, and the withholding rate for each year [4], it is a simple matter to calculate annual withholding amounts without trying to locate 49 years of W2’s or Form 1040’s. My 49-year figures came within $186 of the government-reported withholdings. And I know exactly what my SSI income is.

I assumed those funds must be adjusted or amortized for the value of interest they should earn in any interest-bearing account, making no assumption about what the Congress and Treasury may actually be doing with our money. I chose a 5% APR. Some may object that the government doesn’t credit interest accruals to our account. I am calculating the value of the account, not just the portion allocated to us.

But what is the difference between the principal and principle plus accruals? My own contribution’s cash flow plus assumed accrual worked out to 148.47% of principal. (That’s so low because the early years contributed the least). I calculated what the future value [6] of each year’s total adjusted contribution would be by year 2009. Adding the sum of those payments plus interest equaled just under 12% of my lifetime earnings.

Obviously I won’t be publishing personal financial data out of privacy concerns, but you could run the same calculations on your own account using the source links I’ve provided in “References” below. If you do not yet have a retirement year and estimated SSI monthly income, use your SSA annual statements to make some assumptions. You need to know the effect of different retirement ages on SSI income anyway.

My own work experience may not be entirely representative. I probably worked somewhat longer than the average of all wage-earners. On the one hand, my wages include three years in the military, part-time income in college, and five years of exquisitely marginal self-employment income. On the other, I finally “capped out” on SSI contributions in my last years in the workforce. The difference is what those early years might have contributed to personal savings growth had my income curve been more even. That makes a big difference to my old age, but doesn’t materially affect the amount of my monthly social security payment.

We noted how low my wages were in those early years (even if adjusted for inflation, which we should not do here). My experience would be different from someone who went straight from college into a lifelong professional career. Those earners would “cap out” early, and the Social Security Administration fund would probably never “go into the red” for individuals least likely to depend on it. Conversely, my contributions would be proportionally greater than those of someone who, for example, left the workplace to raise a family, or on account of illness or disability. All I can conclude is that it sounds reasonable that a substantial proportion of the workforce probably survives to receive social security payments well in excess of that ever put into the fund. Perhaps people who complain that is not fair forget that’s the security benefit of a social security insurance plan. Private insurance plans of all types depend on the very same mathematical certainty of pooling of risk.

The reason we can’t add an inflation factor to our calculations is off-topic but worth examining. Savings and other interest-bearing accounts don’t take inflation into account either. There, a dollar is only a dollar whether deposited in 1960 or 2009. I ran the “Inflation Calculator” [5] on my yearly payments anyway, even though I could not fairly use them for my bottom-line calculations. It’s instructive to note that the same $36.13 worth of groceries in 1962 (my FICA contribution for that year) would cost $256.66 in 2009 dollars. Younger readers would not remember the late 1970’s, when so many of us consumed with plastic credit cards bearing an 18.99% APR, since we could more cheaply repay later with devalued dollars. It isn’t just the stodgy classic University of Chicago economic conservatives who call inflation the “hidden tax.” It is. Today we call it “Quantitative Easement.”

In my early years I argued that I would probably live to regret paying into the Social Security fund (as if I had a choice). My spreadsheet proves me wrong. Actuarially speaking, in my case, I should expect to get out of it almost exactly the value of what I put into it. The spreadsheet calculations revealed that my own account will hit “break-even” when I turn age 80.25, and my statistical life expectancy right now in 2011 is age 82.77 years.

Unfortunately, even considering my low-earning early years, the purchasing power of my Social Security “nest egg” would have been worth 91% more (almost double the real purchasing power) if we did not live in an inflation-addicted economy. Our “hidden tax” benefits the government in the short run, because it repays debt with cheaper dollars just like we did with the plastic 1970 credit cards. As you can see, in the long run inflation hurts all of us, including our government.

Unsurprisingly, conservatives and upper-income wage earners will argue that Social Security is inefficient and of limited value. Liberals, seniors and lower-income workers will argue that the vast majority of Americans need a safety net. Despite all the rhetoric on both sides, I’d like to know what is going to be done to save a program that has worked for generations of American retirees so far.

If Congress can’t or won’t fix the program we have now, it would be foolhardy to put our faith and trust in a poor substitute that takes the “insurance” out of Social Security insurance, or, even worse, in some scheme that’ll be shunted off to the same private sector that brought us toxic assets, job offshoring and an imperiled middle class. That’s just my opinion, but whether the polls prove that to be in the 51% majority or 49% minority, it can’t and won’t be ignored.

Many Americans were surprised to hear any frontrunner candidate for President, even Texas Gov. Rick Perry, say recently in the GOP candidate debates that Social Security is a Ponzi scheme. As quoted by the Washington Post on August 29, [1] Perry claimed:

It is a Ponzi scheme for these young people. The idea that they’re working and paying into Social Security today, that the current program is going to be there for them, is a lie,” Perry said. “It is a monstrous lie on this generation, and we can’t do that to them.”

It’s a lie only if and when Congress reneges on a solemn US government promise and obligation. Seniors who have paid into the Social Security fund all their working lives should be outraged. The young and those who are only beginning working careers might well find cause for alarm in those words. I believe we can set the record straight here while still bypassing 95% of the partisan rhetoric. The status of Social Security as a “Ponzi scheme” begins and ends with the intent of Congress.

an investment swindle in which some early investors are paid off with money put up by later ones in order to encourage more and bigger risks.

For more information on Ponzi scheme, see Wikipedia [2]. It is true that the money you’re depositing into your SSI account goes into the Social Security Trust Fund. It’s true that the money credited to “your account” goes not into the purchasing of equities to build a nest egg for your own eventual retirement, but to pay off obligations to the current generation of retirees. Just like most private pension funds, Social Security obligations pose a long and growing debt “tail” of outgo which is micro-managed by Congress in periodic fits of oversight.

According to OMB, the Office of Management and Budget as quoted in Wikipedia [3]:

These [Trust Fund] balances are available to finance future benefit payments and other Trust Fund expenditures – but only in a bookkeeping sense…. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large Trust Fund balances, therefore, does not, by itself, have any impact on the Government’s ability to pay benefits. (from FY 2000 Budget, Analytical Perspectives, p. 337)

The Wiki article quoted Dr. Alan Greenspan as saying: “The crucial question: Are they ultimate claims on real resources? And the answer is yes.”

The devil’s in the details. All the worrisome arguments about how those dollar bill notes paid to you out of the fund come from the current cycle of depositors, and are not “your” dollar bills, could equally well be applied to any checking or savings bank account you own. This out-of-context argument makes no sense. The thing to remember is that it’s YOUR account, and the source of the physical greenbacks is an irrelevant distraction. The obligation to make good on your account is indeed YOUR asset, and morally it should certainly not be subject to the discretion of Congress, any more than your bank can legally decide whether your savings withdrawals coincide with the bank’s current priorities.

It’s a well know fact that the Baby Boomers are putting a heavy strain on the Social Security system. We’ve known that was coming for half a century. As we face a looming cash flow problem with Social Security, I think Congress and not individual Americans deserve full blame and responsibility for that.

Personally, I was trained in classical laissez-faire economics, and I’m very conversant with all the theoretical arguments why Social Security was a mistake in the first place. They’re just another political case of “that may work in practice, but it won’t hold up in theory.” In my twenties I resented Social Security bitterly. After a lifetime paying into the fund, and a lifetime observing corporate practice in the American workplace where I worked for over forty years, I saw I’d be a fool to trust any “privatized” solution. Neither am I amused when I hear my account dismissively called an “entitlement.”

Reasonable people will conclude that Social Security is NOT a Ponzi scheme because, among other things, it is NOT a get-rich investment scheme and, for better or for worse, the “real resources” backing the fund are United States Treasury bonds. One could, if one wished, even argue that Perry was really calling into question the full faith and credit of the United States government. After all, it was his party that shook world confidence in our national will to pay our just debts and obligations in the first place.

“I spoke to Rick Perry Thursday night,” said Wes Maddox, a GOP activist in Tampa who went to Texas A&M with Perry, who is expected to make his first Florida stop Sept. 13 in Tampa Bay. “He said, ‘You tell them (in Florida) help is on the way.’ That’s what the governor’s message is – help is on the way.”

And according to the same source, Michele Bachmann said:

“I don’t know how much God has to do to get the attention of the politicians. We’ve had an earthquake; we’ve had a hurricane. He said, ‘Are you going to start listening to me here?’ Listen to the American people because the American people are roaring right now. They know government is on a morbid obesity diet and we’ve got to rein in the spending.”

How fatuous. Does Bachmann really think God has joined her Tea Party to intervene in partisan politics? If so, doesn’t that make her Tea Party The Party of God? How ironic she’d paint their god as an obsessive-compulsive klepto.

Millions of Americans who have paid into the Social Security fund their entire working lifetimes were angered to hear this new breed of political opportunist call Social Security benefits “entitlements.” That was just a warning shot across our bow.

Where is the consistency in a Tea Party that mocks the working class, our once and former middle class, with taunts of “entitlement?” Millions of unemployed and displaced were ruined by the ongoing global financial hurricane, itself spawned by corporate carpetbaggers masquerading as “free enterprisers.” Newly poor Americans may soon find themselves in the ranks of the chronically unemployable and dispossessed. They will be dependent wards of the welfare state that those carpetbaggers, who helped create the very conditions that fuel the poverty/welfare cycle, detest. Those Americans might be surprised to hear themselves called welfare cheats and social parasites.

Who is next? When do we get to hear Tea Party rants about “entitlements” for the victims of Irene, Katrina, mine disasters, victims of wacko shootings, and other “nanny state parasites?”

Give me your poor, your tired, your huddled masses yearning to breath free … if “help is on the way,” as Perry, who as governor of Texas lacks jurisdiction over the Eastern Seaboard, was said to promise: let the Almighty sweep the carpetbaggers out to sea like cockroaches in a storm drain. In the long run, marginalizing our fellow citizens with outsourcing, corporate mismanagement and rampant corruption, toxic assets and Bernie Madoff style investment schemes, all the while painting us as bloodsucking socialist parasites, just won’t cut it. Heed the roar of reality. “Arab Spring” won’t begin to cover the revolt.

On August 2 the world watched the conclusion of Congress’s recent and embarrassing failure to address time-critical debt ceiling and budget decisions until the very last possible moment. It was very possibly the first time in recorded history that Communist China lambasted the United States in a rant almost everybody here in the United States could actually agree with.

We averted a credit default, but the solution was a draconian compromise that’s sure to please nobody. The compromise left untouched revenue strategies, our dire unemployment picture, and the need to balance the budget. If any modern American corporation conducted its management planning the way our senators and house representatives do, its Board would have long ago fired the lot of them. That situation is hardly new.

Our underperforming Congress largely falls back on a blizzard of blamestorming to excuse its failure to execute. If you’re a Republican, it’s the fault of those intransigent liberal socialists who are trying to kill off the goose that laid the golden egg. If you’re a Democrat, it’s those fascistic neoconservative plutocrats who are again trying to push the U.S. working class into virtual serfdom.Continue reading →